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Internet/Telecom

Heartland Institute on the FCC’s Net Neutrality Power-Grab

The Federal Communications Commission today moved in to regulate the Internet, which is the wonder of the modern age exactly because the FCC hasn’t been able to get its hands around its throat. Don’t just take it from me and others at The Heartland Institute. Some guy named Steve Wozniak wrote in The Atlantic that the little tech company he helped found named Apple would have never had a chance to fundamentally transform our economy and our everyday lives if the rules the FCC just imposed were in place years ago.

I believe this is the end of the Internet as we know it. If the barrage of lawsuits soon to come don’t dislodge the FCC from a place it has no jurisdiction to regulate, it will burrow itself in for good. And we’ll all be the poorer for it — never knowing what cool stuff we’ll miss because of a world where companies play an expensive game of “Mother May I?” with bureaucrats before moving forward with their next innovation.

At a time when we need much less regulation of industry across the board to encourage economic growth, the FCC has just inserted its muck-making machine smack dab in the middle of the only industry keeping America’s economy afloat.

Here are a couple of Heartland videos that help explain the net neutrality debate: (“Net Neutrality: Part 1” and “Why Obama is Wrong about Net Neutrality.”) Here is a Heartland policy study that exposes the Marxist history of the net neutrality movement. And here is my contribution to the statement Heartland released to the press today in reaction to this inevitable, but still depressing, news:

“The FCC’s ruling is good news for attorneys, who will bill countless hours to fight this illegal power-grab in court. For everyone else, especially those who have enjoyed the wonders of the digital age, this is bad news.

“The modern Internet exists because market forces drove investment and innovation. The only regret the average consumer experienced under such freedom was not upgrading faster to the latest version of the coolest new device or service. It is this ‘flawed’ market three members of the FCC were determined to ‘fix.’

“Instead of fixing the market, the FCC will succeed only in stifling it by declaring itself the sole gatekeeper to the future of the digital economy. And instead of working to meet the demands of consumers, technology companies will instead turn their attention to Washington and spend resources convincing the FCC to rig the market in their favor. Only a bureaucrat could think that’s an improvement over the status quo.”

Please also read the comments of Bruce Edward Walker, managing editor of Heartland’s InfoTech & Telecom News, and Marc Oestreich, legislative specialist for technology policy at The Heartland Institute by clicking here. This is not a good day for our digital liberty and the inherent dynamism of a truly free digital economy.

UPDATE (9:08 p.m. CST): If you have a subscription to The Wall Street Journal online, don’t miss this piece by John Fund. He outlines His lead:

The Federal Communications Commission’s new “net neutrality” rules, passed on a partisan 3-2 vote yesterday, represent a huge win for a slick lobbying campaign run by liberal activist groups and foundations. The losers are likely to be consumers who will see innovation and investment chilled by regulations that treat the Internet like a public utility.

Exactly … and depressing. Fund goes through a bit of the vital background we outlined in the Heartland Institute policy paper titled “Neutralism: The Strange Philosophy Behind the Movement for Net Neutrality.” Fund writes:

The net neutrality vision for government regulation of the Internet began with the work of Robert McChesney, a University of Illinois communications professor who founded the liberal lobby Free Press in 2002. Mr. McChesney’s agenda? “At the moment, the battle over network neutrality is not to completely eliminate the telephone and cable companies,” he told the website SocialistProject in 2009. “But the ultimate goal is to get rid of the media capitalists in the phone and cable companies and to divest them from control. …
For a man with such radical views, Mr. McChesney and his Free Press group have had astonishing influence.  Genachowski’s press secretary at the FCC, Jen Howard, used to handle media relations at Free Press. The FCC’s chief diversity officer, Mark Lloyd, co-authored a Free Press report calling for regulation of political talk radio.
No one (other than perhaps fans of Heartland, the Tech Liberation Front, Cato@liberty and readers of this John Fund piece) knows the full extend of this noxious “free Internet” movement called net neutrality. It’s not too late to study up.

UPDATE (9:30 p.m. CST): Scott Cleland at the Precursor Blog has several great “take-aways” on this dread news, as well.

UPDATE: (10:35 p.m. CST): Future Senate Majority Leader Eric Cantor says he will ensure “rigorous oversight” to “explore all our legislative options to put things back on the proper track.” The hearings should be brief. Just tell the FCC that it can’t do what it wants to do. The bill can even be one page.

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— Jim Lakely

Jim is the the director of communications at The Heartland Institute. Prior to joining Heartland, he was an ink-stained newspaperman for 16 years with many stops in "old media." Jim covered Congress and The White House during the George W. Bush administration for The Washington Times, and worked as a reporter, editorial writer and columnist for newspapers in Pennsylvania, Virginia, and California. He has appeared on the Fox News Channel, CNN, MSNBC, C-Span, and many local and national talk radio shows to talk politics and policy.

  • http://www.facebook.com/people/Stu-McNichols/100000239612861 Stu McNichols

    “We’re gonna have a revolution…” ya’ll gonna just stand by…and , again…George Soros!

  • Someguy

    Mr. Lakely, you clearly didn’t understand what Wozniak had to say. Every example he gives is of a corporation that limits his access to technology. The phone company wouldn’t let him use an answering machine… and this is where you may have become confused.

    In 1913 the FCC implemented Tariff 132 that stated: “No equipment, apparatus, circuit or device not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physically, by induction or otherwise.” This was enacted because telephone wires provide (and allow in) electrical current. This had the potential to disrupt AT&T’s system. The Carterfone decision in 1968 paved the way the FCC reconsidering Tariff 132 thereby allowing other equipment to be used.

    It was against the law to use an answering machine in 1972, as in Wozniak’s case, because of a misapplication of Tariff 132 that AT&T used to it’s advantage to protect its’ corporate interests. The actions taken by the FCC today clearly mirror their actions in 1976. Net neutrality seeks to guarantee consumers rights to open access at a reasonable price in opposition to “closed” corporate controlled schemes that limit access and choice.

    Every other example he provides (DSL, HBO, Satellite TV) shows how unregulated corporate control, the same themes that anti-Net Neutrality endorse, limited his choices.

    Here’s a few links concerning AT&T and Carterfone that you might find interesting:

    http://www.sandman.com/telhist.html

    http://arstechnica.com/tech-policy/news/2008/06/carterfone-40-years.ars

    • http://www.facebook.com/ronald.a.lau Ronald A. Lau

      “The phone company wouldn’t let him use an answering machine..”

      No.

      The FCC wouldn’t let him use an answering machine. The phone company couldn’t stop a person from hooking up an answering machine, nor could they determine if someone had one on their lines. The FCC effectively killed the making of the machine, since no one would be willing to purchase one if it was illegal to use it. If the Government/FCC told the phone company ‘We are not going to do anything. Tell your customers you will cut them off if they use a device you don’t like. See how far that gets you.’ , I bet the phone company would have taken a different tact.

      The phone company acted by bribing the Government to regulate the answering machine (and therefore competition for its devices) out of the picture. Who benefited from this act? The phone companies customers, or the phone company, or the Government?

    • http://www.heartland.org JimLakely

      Someguy says:

      It was against the law to use an answering machine in 1972, as in Wozniak’s case, because of a misapplication of Tariff 132 that AT&T used to it’s advantage to protect its’ corporate interests.

      See, here is where you misunderstand. It was “against the law” to use an answering machine in 1972. The key word in that phrase is “law.” Who makes law? Government. Big business conspired with government to make something (an simple answering machine) that it thought would go against its entrenched business plan illegal. If you don’t think the same thing will happen with the Internet now that government has its hands in the industry … well, then you are ignoring history.

      I’ll take an economic climate where businesses are going after each other (and going after OUR business) over a regime where businesses are going to Washington to rig the rules in their favor.

  • http://www.facebook.com/ronald.a.lau Ronald A. Lau

    A black-net will arise.

  • Anonymous

    geez, the least you could do is specify which rules you have a problem with. It is a fairly technical and complex issue that is being over simplified by the user. It really isn’t an issue about marxism or any other kind of ism. This is a very weak analysis if you ask me. As a libertarian I’m not at all in favor of big government regulations but I’m also not in favor of allowing the small number of ISPs to take bribes from specific providers that would allow them to meter download speeds based on what each of those providers bribed them with. What if two movie service providers provide a similar service but one pays a bribe (or fee) to the ISP to have their service provided at a higher rate. Meanwhile all consumers are charged a flat rate for monthly access. They then have little choice but to use the service that works better due to the higher speeds that are being “allowed” by the ISP. If you care about this issue I suggest that you read info from many other sources. Choosing an ISP isn’t like choosing a blender at walmart.

    • http://www.facebook.com/ronald.a.lau Ronald A. Lau

      You are not a Libertarian if you are in favor of the FCC’s decision.

    • http://www.heartland.org JimLakely

      The rule I have a problem with is all of them. Or, more to the point, I have a problem with the FCC regulating in a space where (1) the market has not failed consumers in the slightest and (2) where it has zero jurisdiction to do so, as clearly stated in the April Comcast v. FCC decision.

      I’d like supporters of this power-grab to demonstrate (and cite more than a handful of anecdotal examples that the market already corrected) real harm to consumers. Shouting, “but they could do something I don’t like” doesn’t cut it — especially considering the lost opportunity cost this action history proves will come about.

  • http://www.facebook.com/ronald.a.lau Ronald A. Lau

    Choosing an ISP is like choosing a blender at Walmart. Its just that this is the equivalent of when there were only 2 or three blender makers, because they were just recently invented.

    I guess the person who said it isn’t is 20 years old and doesn’t remember the days of dial-up.

    Broadband exists because users DEMANDED it and would PAY for it.

    It only took 10 years for dial up to go the way of the dodo bird. Its only been 10 years since cable/fiber broadband. Wireless went from 2G to 3G to 4G. It would have surpassed cable/fiber before to long, allowing freakin cars to be connected.

    Now the broadband suppliers will be spending their money on Washington lobbyists and politicians, instead of on trying to keep their customers happy.

    Nice going Hippies/Liberals/Socialists. Hope you like your new internet. Just wait till the FCC starts handing out fines for indecency…..

    • http://www.heartland.org JimLakely

      Well said, Ron. The proliferation of wireless broadband — which has a tiny window to grow now because the FCC excluded that industry from its regulations … for now — will make much of the current debate over the supposed “abuses” of the ISP market obsolete.

      The fact that technology today advances so fast is both a blessing and a curse. It’s a blessing for the obvious reasons. It’s a bit of a curse because it makes people impatient, and dismissive of the miracle of the modern Internet. It’s also a curse because people presume that what they now experience was pre-destined, and letting government into the mix will have no deleterious effects.

      In fact, what we now have is entirely the consequence of (yes) the Clinton administration telling the FCC to butt out of the digital economy in the 1990s. The Internet is still in its formative years — a great point you make in your comment, Ron. Let’s allow this wonderful beast to grow a while before we put a leash on it, eh?

  • http://www.facebook.com/ronald.a.lau Ronald A. Lau

    And the real reason the FCC made this decision, is to protect their jobs.

    If the FCC is not in control over the Internet, then they will become irrelevant in 20 years. This decision will make sure that the people that work there have a job in 2o years.

    This is the nature of a Government of people. This is why a Government needs to be limited. Otherwise, the people in it will work to perpetuate their own jobs. Although this is no different than people in a private company, a Government doesn’t have to be profitable. It only has to be seen as ‘doing something’.